Virginia’s New Metropolitan Growth Leaders

Northern Virginia has set the pace for economic growth in Virginia for so long, it’s hard to remember when any other region led the way. But this decade’s contraction of the defense industry has hit the NoVa regional economy hard. Inflation-adjusted growth in the Gross Domestic Product between 2010 and 2016 averaged only 1.2% in Northern Virginia, according to the 2017 State of the Commonwealth Report. Thanks to the innovation capacity of NoVa’s technology sector, the growth rate could have been far worse. Hampton Roads, also dependent upon military spending, experienced essentially zero growth over the same period.

Economic growth leadership for the past several years has shifted to the Richmond, Charlottesville and Blacksburg metropolitan areas. Richmond experienced 2.0% growth, while the home towns of the Hoos and Hokies racked up 1.8% annualized growth. Not one metro area matched the U.S. average growth rate of 2.1%, however. The economies of Staunton, Harrisonburg and Lynchburg actually contracted. (The figures don’t tell us about non-metropolitan Virginia, but the picture probably wasn’t pretty.)

Here’s the State of the Commonwealth report’s breakdown of GDP growth by metropolitan area (click for more legible image):

Somewhat different story for wage growth: Here Charlottesville and Roanoke led the way. Northern Virginia was the state laggard.

And one more measure, taxable sales, where Richmond and Lynchburg blazed new paths to consumer excess:

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18 responses to “Virginia’s New Metropolitan Growth Leaders”

  1. LarrytheG Avatar

    If someone said there is a strong correlation between population growth and sales tax growth – would they be wrong?

    A GOOD metric for measuring real regional “growth” probably ought not be looking at metrics that are influenced by population alone and sales tax would be influenced by population growth (as well as median income).

  2. LocalGovGuy Avatar

    A little confused about the sales tax chart. Is the 5th column supposed to read 2014-2017? Or is it 04-07? I ask b/c Lynchburg’s numbers don’t make sense. If you average 2014-17, I get a 4.2% growth.

    1. Looks like a typo. Sharp eye!

  3. TooManyTaxes Avatar

    Seems consistent with everything Fairfax County budget officials say. Job growth at the highest end isn’t there. Lot’s of new low-wage service jobs and not much growth in real estate values, with a lot of empty & obsolete office buildings.

    The best thing for Northam to do is just to steer the ship Virginia for four years, avoiding any significant new programs or big increases in spending, while hoping to avoid any major across-the-board reductions.

    1. djrippert Avatar

      I disagree. The best thing Northam can do is follow up the Democratic gains in 2017 with the establishment of clear majorities in both houses in 2019. The only hope for Virginia is to focus on continuing to really urbanize its semi-urban areas. The only hope for Virginia’s urbanizing areas is the Democratic Party of Virginia. The RPV has held power long enough to demonstrate its corruption, incompetence and inability to see the forest for the trees. In fact, they can’t see the trees for the bark. The RPV’s brain dead insistence on forcing urban and urbanizing areas to operate like Hooterville is killing those urban and urbanizing areas. The truth is that the RPV is composed of thowbacks who see Virginia in the days of the Byrd Machine as a grand place. Their mindless pandering to the long gone rural economics of the past will doom Virginia. The only hope is to sweep them out of office and replace them with Democrats who understand that America’s wealth is created in the cities and a state that operates in an anti-city manner is doomed to fail.

      1. TooManyTaxes Avatar

        Outside of broadening the tax base (meals tax, higher cigarette tax, higher lodging tax) and repealing the proffer limitations on residential construction, I am not aware of anything substantive that is desired by the current Fairfax County BoS that is prohibited by the Dillon Rule. Fairfax County has a veto power over NVTA because of its size. It does not want a tax plan for Metro that shifts any more costs to NoVA. Rather, it would like the State to provide the funding – nothing to do with the Dillon Rule.

        The County would like the LCI school funding formula adjusted to recognize the higher cost of operating here and the large number of low-income students in the system. Nothing to do with the Dillon Rule. It would like more funding for GMU – no Dillon there. It wants Maryland to add a second span at Cabin John and widen the Beltway from the Bridge to the I-270 spur.

        The Dillon Rule is largely an excuse for not having a better business climate and also provides elected local officials with the best excuse when they don’t want to do something – Gee I would but for the Dillon Rule.

        I’m not buying the Dillon Rule as a major force in the slow-down in economic growth in NoVA.

        1. djrippert Avatar

          Oh, I don’t think our local officials are very good either. But that’s the problem – the locals point at Richmond and Richmond points at the locals. The only way to have a successful city is to operate like a city. High taxes, considerable social services, emphasis on mass transit, etc. Despite conservative caterwauling none of these things limit economic prosperity for a city. In fact, they create prosperity. San Francisco and New York aren’t dying – they are on fire, economically speaking. If Virginia wants to thrive in the future it better figure out how to encourage urban areas. That means city councils that understand urban affairs, a state that doesn’t try to squelch urbanization, cities that are part of counties and most of all … an end to the anti-democratic love of Dillon’s Rule.

          Sorry, TMT – but reality intrudes on your theory. Wealth in America is produced in cities. A state government that discourages urbanization is committing economic suicide. The RPV could never grasp this as they tried to maintain the modern day incarnation of the Byrd Machine. Hopefully, the DPV can grasp this. Side Show Bob Marshall is gone now. It’s high time the rest of the dimbulbs from the RPV are run out of town as well. The days of Virginia emulating Mississippi need to end once and for all.

  4. LarrytheG Avatar

    So should Northam do like Gillespie promised? Tax cuts to spur economic growth?

    1. TooManyTaxes Avatar

      That would be a silly thing to do. No significant tax change in Virginia since I moved here in 1984 has occurred without cooperation from both the GA and the Governor. I would recommend to the Governor-elect that he discuss a tax cut as part of an overall growth plan. But the best thing Northam can do is just run state government as efficiently and effectively as possible.

  5. LarrytheG Avatar

    The GA could actually do the cuts, send them to Northam to see if he’ll sign, right?

    1. TooManyTaxes Avatar

      But again, Larry, tax cuts and tax increases have occurred only when the Governor have worked together to assemble an acceptable package. What sense does make to try a different approach? I don’t see your logic on this one.

      1. LarrytheG Avatar

        “logic” in politics? good grief TMT… !!

        The GA has it’s view that it does follow in legislation.. for instance the Medicaid expansion… so the Gov has proposed it and they rejected it so why can’t they actually legislate a tax cut – and force the Gov to veto it – and make political points in doing it?

  6. djrippert Avatar

    I’ve never understood the logic of measuring “Northern Virginia” instead of “Washington Metropolitan Area”. I know the “statue huggers” from Central Virginia struggle with this – I can be in Maryland or DC much faster than I get get to Fairfax county’s neighbor, Prince William County. I have GMP numbers for Wash Met from 2010 – 2015 of 1.8%. Given the relative strength of 2016 I have to guess that the Wash Met is about the same as the Richmond Met. Within the Wash Met there are multiple reasons why NoVa gets less than “it’s fair share” of the growth. Federal focus on military and homeland defense (vs. Maryland’s focus on life sciences), Less urban and, therefore, less attractive to millennials than DC proper. Weaker universities than suburban Maryland or DC. A Dillon’s Rule implementation in Virginia that ham strings NoVa’s local governments in keeping up with DC and MD.

    I thought the Washington Post had an interesting article about DC proper …

    The days when the Imperial Clown Show Show in Richmond could use NoVa as an ATM machine for the rest of the mismanaged state are over. A large part of that theory depended on local government incompetence in Washington, DC. That incompetence ended with the election and re-election of Mayor Anthony Williams (mayor from 1999 – 2006). Williams implemented a blueprint that is essentially still being followed today. We’re coming up on 20 years of sustained progress in DC while the Dillon’s Rule obsessed Imperial Clown Show flipped, flopped and floundered in NoVa.

    Hopefully Richmond will be in a position to become the Clown Show’s ATM once their gross incompetence and culpable negligence has drained any incremental wealth generating ability from NoVa.

  7. LarrytheG Avatar

    I remain unconvinced that the Dillon Rule “harms” NoVa in any significant way and Dillon and Home Rule are actually in the same realm in that whatever Home Rule a jurisdiction might have – is what the State “allows” and even Home Rule jurisdictions are still subject to State-level rules.

    With DC, I don’t know although from time to time – we hear DC is subject to Congressional “rules” …

    Any any rate – I’m not sure I’ve ever seen a detailed , point-by-point comparison of the “rights” of home-rule jurisdictions compared to Dillon Rule and there are some obvious issues with home-rule in the Houston region in that upstream jurisdictions allow land-use that does not have enough storm water capacities and now downstream jurisdictions in Houston see flooding in areas not flooded before -in large part because of the the impervious surfaces upstream on land that previously was vegetation.

    So … I guess I might be more convinced as to Don’s point if he could give some specific examples.

    1. LocalGovGuy Avatar

      It’s not so much Dillon’s Rule as it is the Constitution of Virginia…but a significant drawback of Virginia’s system is “independent cities.”

      You have posted about the Fredericksburg region a lot. Why does the tiny City of Fredericksburg have its own school system and its own constitutional officer bureaucracies?

      The reality in Virginia is that the state is very provincial and its GOP loves it that way. The two simplest structural changes that can be made, which would definitely aid economic growth, are abolishing the independent city concept and allowing more regional bodies with governing/taxation authority.

      All one needs to do is look at the absolute dysfunction in Richmond over the past 40 years to understand why both of these changes would definitely lead to greater economic growth for Virginia. Had Richmond, Henrico, Chesterfield, and Hanover worked together, I imagine that Richmond would be a much more prosperous region today (think about how far Raleigh-Durham eclipsed Richmond in the past 20 years).

      1. TooManyTaxes Avatar

        It’s been my understanding that at least some cities in Virginia were formed by groups of citizens to get away from their county. A good example is the City of Falls Church that was formed as a city to avoid Fairfax County’s public schools. I am aware of a number of communities in Fairfax County that would like to break off into a separate city to avoid the County’s often lax land use regulation and large subsidies to schools in other parts of the county. Isn’t this more “home rule-like” than situations where communities cannot break from their counties? And why would the City of Fairfax, for example, want to give up its local decision-making to become a small part of Fairfax County?

        We also have a short memory. GOP control of the General Assembly has been relatively recent if one considers the entire history of the State. What we have was developed by the Democratic Party when it controlled state government. Vince Callahan told me that, when he was a delegate to the last constitutional convention, the GOP members could almost caucus in a closet. The Republicans just figured out how to operate the system 25 years ago.

  8. LarrytheG Avatar

    re: independent cities… well.. they have more autonomy and taxing power and historically were formed because people wanted more services than counties would provide.

    But now days, some counties have become “citified” and provide services similar to independent cities.

    HOWEVER – there are no shortage of counties – who will not work together with other counties as a region… that’s actually a common thing in Va.

    and yes.. combing school systems , fire and rescue and public safety , libraries, landfills, water/sewer and jails makes a lot of sense …

    and there is SOME of it in various degrees … but if you really want to see how well NOT! that regions work together in Va – look no further than the PDCs and MPO where the primary goal of participation is to make sure you get “your share” – gawd forbid they look at the transportation network in a regional context! Hampton Roads, as an example, could not agree on a regional plan – and ultimately – VDOT was forced to make the decisions.

    Many counties are just plain incompetent at transportation planning even separate from regional cooperations. Schools are just as bad.

    James City County and Williamsburg are a success story …

    1. LocalGovGuy Avatar

      You hit on the real issue with this ridiculous structure. Look at other states:
      A “city” is a distinct area in which residents want more government services than the County offers. Traditionally, this meant more infrastructure (water/sewer), police protection, and parks & rec. It did not mean a separate prosecutor, court system, and school system.

      I cannot imagine the savings to taxpayers if all these ridiculous bureaucracies were abolished. There is absolutely zero reason that the “city” of Martinsville with a population of less than 15,000 should have its own school system, Commonwealth’s Attorney, Clerk of Court, Treasurer, Commissioner of Revenue, and Sheriff.

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